Chancellor John Healey will announce at the UK Budget today that standing charges on gas bills will be scrapped from next year for around 23 million homes.
The charges are a fixed daily fee added to bills regardless of how much gas a customer uses, costing around £108 per year for a typical household.
Treasury plan and potential savings
The Treasury said Mr Healey will ask regulator Ofgem to remove standing charges “in 2027 or as soon as possible after”.
Instead, fixed costs will be paid on the unit rate, which the Treasury said could save 60% of households an average of £45 on their annual bills.
Martin Lewis on timing and electricity
Money Saving Expert website founder Martin Lewis told Radio 4's Today programme this morning he had met with the Chancellor at 11 Downing Street.
He said he had asked Mr Healey if he would look at the equivalent cut for electricity, and the Chancellor said he was told he would be working on that in the next year.
“This is going to come in, this standing charge gas cut, they say in 2027. In reality because it's a cut on the price cap, they don't affect other tariffs. Other tariffs are free to set their own rates. I think it'll come in on October 1, 2027 or January 1, 2028”, Mr Lewis said.
Long-term fairness and support package
Asked if that delay worried him given the geopolitical situation around the world, Mr Lewis said this was about long-term fairness.
Mr Lewis said he had long campaigned for the charges to be removed “because they're a moral hazard” and a disincentive for lower energy users to cut their bills, describing them as a “poll tax” on energy.
He said this is not the single measure to “materially” bring energy bills down, noting that the price cap rises in January mean a typical bill will go up £100 in the three months from then.
“I think there will have to be a support package put in place from January. I asked the Chancellor about that, I got a 'read between the lines' answer that yes he will be doing it,” he said.
Mr Lewis said he had suggested to the Chancellor any scheme should be by council tax bands, with payments to those in Bands A to D, not an extension of the Warm Homes discount scheme.
